Lucrative mornings: how to maximise hot drinks and breakfast sales

Olivia Gagan pulls out the key trends in the breakfast & hot beverages category, identifying which products will help you boost your profit.

Some say breakfast is the most important meal of the day: for wholesalers, it can certainly be one of the most lucrative. While the traditional round of toast hastily eaten by millions of Brits each morning continues to be popular, increasing demand for healthy, alternative and on-the-go breakfast options means there are a host of emerging trends and products to seize upon. Added to that, wholesalers who maintain a compelling hot drinks offer will find further opportunities to market these lines together with their breakfast ones.

Out of home

It is no secret that out-of-home breakfast sales are on the rise. This growth shows no sign of decline, with an increase of 31% in spend on breakfast out of home, making the total value of the out-of-home breakfast market £20.2bn, according to NPD Crest research. It is therefore a vital opportunity for you to tap into.

Weetabix’s head of brand, Kevin Verbruggen, points out that consumer behaviour is changing, and he believes the need for convenience at breakfast is becoming ever more apparent. He adds: “There are 3.5bn occasions annually where people are either skipping breakfast or eating it out of home. Research shows that almost a quarter (24%) of consumers buy breakfast on the go once a week.”

Verbruggen highlights that shoppers are demanding more than mere convenience when eating breakfast on the move, and want health-conscious on-the-go breakfast options. They are willing to spend more if it means that they are eating wholesome, nutritious foods, he says, and adds that healthy out-of-home breakfast products therefore have high potential for strong returns, with 42% of shoppers spending between £2-3 on their breakfast mission and 34% spending up to £5.

How can you pick the right products to capitalise on this trend, though? “Transparency on-pack is important, and wholesalers should take that in to consideration when choosing products to list,” he advises.

Victoria Gilbert, head of sales at dairy alternatives drinks company Rude Health, agrees with Verbruggen that clear on-pack labelling of product features and health benefits is vital to ease of purchase, for wholesalers, retailers and shoppers alike. “By merchandising by product type, instead of brand, wholesale customers can easily filter the choice and compare products by more than just price point – pack size, allergen information, organic, etc,” she says.

Making the most of out-of-home also means choosing stock size carefully, and offering a range of products to meet varying requirements, Gilbert says. “It is important that wholesalers consider transportability and pack size when selecting which breakfast products to list. The purchasing intent behind a litre carton and a 250ml carton come from two completely different places,” she notes. “A litre carton sits in your fridge or behind your bar and a 250ml travels with you, so wholesalers should not hesitate to stock the same product in different pack sizes.”

Home breakfast goods

While on-the-go is an undeniable trend, breakfast at home remains the biggest opportunity in terms of breakfast occasions.

In total, the cereals category is worth £1.3bn in the UK and over 95.4% of the UK population has bought cereal in the past year, translating to 11bn occasions annually – making it essential to offer your customers a compelling mix of products. Health-focused products – with ‘free-from’ or reduced levels of processed sugar, gluten and salt – are becoming more important to consumers, and brands are making products to suit. Kellogg’s, for example, is lowering the salt and sugar content across its cereals, and removing artificial preservatives. It also has a new plant-based cereal range called WK Kellogg, which includes no-added sugar, low-sugar, organic and vegan options.

Health is a key feature even in hot, traditional breakfast goods. Princes marketing director, Graham Breed, says: “Demand for baked beans is not slowing down, but we have added a ‘gluten-free’ claim on-pack in response to consumers becoming increasingly health-aware, and because of the increase in free-from eating.”

High protein content is also high in consumers’ minds in the cereal and at-home segment. Quaker Oats marketing manager Eric Williams, says: “High [levels of] protein is seen as important when buying breakfast cereals by 32% of eaters.” As a result of this trend, products are emerging to satisfy this demand.” PepsiCo took the decision to launch Quaker Protein to the market in June 2017, for instance.

Canned goods are another traditional at-home breakfast option where wholesalers can make gains. From kippers to peach slices, Breed says that “in light of the fact that 99% of the UK population buys canned goods, we consider retailers and wholesalers should allocate a significant amount of fixture space to canned grocery.”

At home, ease, speed of preparation and healthiness are at the top of consumers’ wish-lists. As an example, Breed says Princes has noticed an increase in adding canned fruit to cereal – a breakfast which is fast, easy to prepare and healthy, and one it says has grown by 6% over the past year. Adding canned fruit to yoghurt grew by 8% in 2017, he notes. Cross-merchandising can help drive sales of at-home breakfast solutions, says Breed. “An effective means of supporting retailers with their own cross-merchandising strategies can be to display complementary products together, like canned fruit with cereal and yoghurt, or baked beans with bread,” he adds.

Hot Drinks

The hot beverage market has seen steady growth year-on-year, and a cup of hot tea is still the most popular drink in the UK. The sales opportunity it offers spans across the day, with 3.1bn tea occasions out of home in the UK, making tea an essential source of revenue for wholesalers.

To make the most of a dizzyingly large category, tea giant Tetley’s senior brand manager Marshall Kingston suggests “blocking brands and arranging bestselling ones together.” He adds: “Displaying different teas in a logical sequence also allows for easy navigation of what is on offer. Wholesalers need to ensure that they stock a range of sizes and formats specifically for caterers, including the three growing segments: green, fruit & herbal and speciality tea.”

Tea brand Clipper’s research aligns with this trend for speciality teas. It says demand is growing for organic tea, and was up 10% year-on-year in 2017.

With regards to coffee, Martyn Bell, UK category marketing manager at Jacobs Douwe Egberts Professional (JDE), says: “Coffee is showing signs of premiumisation – both out-of-home and in-home. A trend for high-quality, barista-style beverages is helping to further boost value growth across the sector. This means wholesalers need to think carefully about the range they offer in-depot, online or through sales brochures. Are they offering the right range and price tiers to fulfil customer and consumers’ increasingly premium demands and how does this add value?

“Offering premium instant products, like Kenco Millicano, which is a blend of finely milled beans and premium instant coffee, provides operators an easy way to benefit from the premiumisation trend.”

Last year saw the relaunch of Maxwell House, JDE’s instant brand. Bell says there is still “enormous” demand for instant, especially in the workplace. “For professional caterers, instant coffee makes great sense, balancing commercial needs, with a desire to easily satisfy their customers. We recognised that it was time to update this iconic brand with a smart new look and advertising campaign that reflects its ‘smart choice’ brand positioning.”

Retailer Viewpoints

“We have seen a big uplift in fruit snacks, yoghurts and granolas. Drinks are becoming more seasonal – hot chocolate is a big seller in winter, for example – and our shoppers are now looking to get better value through adding syrups to hot drinks. I realise wholesalers cannot meet with every single retailer to discuss their needs, but if they could talk to a cross-section, that would be great.”

Scott Graham,
McLeish store
Inverurie, Aberdeenshire

“I have a fresh food-to-go counter staffed from 8am daily. High-quality croissants, doughnuts and cakes sell well. Location is important. Healthy breakfast foods are not so popular where we are: here, it is all about fuelling up, and by way of example, we do particularly well with the local building trade.”

Better Wholesaling gives easy-to-read, authoritative and actionable advice to grocery and foodservice wholesalers. We aim to help the industry improve sell-through and support its customers better by promoting best practice examples from leading wholesalers and suppliers across the foodservice, cash & carry and delivered sectors.